Original-Research: ZEAL Network SE (von NuWays AG): Buy
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Original-Research: ZEAL Network SE - from NuWays AG
09.12.2024 / 09:00 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.
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Classification of NuWays AG to ZEAL Network SE
Company Name: ZEAL Network SE
ISIN: DE000ZEAL241
Reason for the research: Update
Recommendation: Buy
from: 09.12.2024
Target price: EUR 60.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch
Exceptionally strong current trading; raising ests & PT
Topic: following 7x peak Eurojackpots in the last weeks, Germany was in a
lottery fever with exceptionally high user activity and lottery spendings up
2-3x above average. For Germany's #1 online provider of lottery, this bodes
for exceptionally high lottery billings and sales in this period, but more
importantly, user intake at attractive prices. In detail:
Q4 jackpot situation: out of the two main German lottery products, the
Eurojackpot is the one to be excited about in Q4. The jackpot was hit last
Friday, thus Q4 came with a new a record streak of 7x peak jackpots, which
led to a new record of EUR 1.24bn in lottery spending on this product in Q4.
This was a staggering 33% above the LTM average and already (with 3 weeks to
go in Q4) exceeded Q4'23 by 33% yoy and Q2'24 by 17%. - see p. 2
Q4 billings & sales growth: the jackpot situation should have already pushed
Q4 top-line to new peaks, as several sales drivers are kicking in at the
same time: (1) the jackpot situation leads to an higher spending, as the
inactive customers become active at these times which adds to the high user
base on top of strong customer acquisitions of the past. All this should
leads to elevated lottery billings in Q4, which we assume to arrive elevated
by 34% yoy at EUR 281m (assuming average jackpots and user behaviour from now
until end of Q4). Now even better, ZEAL's price optimization as of H2'24
should also expand the billings margin by 3.9pp yoy to 16.3% (eNuW), serving
as additional and major lever on sales. Consequently, Q4 lottery sales
should rise by a staggering 75% yoy to EUR 46m. - see p. 2
User intake at attractive prices: To take advanteage of the jackpot
situation (i.e. when most players are more prone to switch from offline to
online), we expect ZEAL to go full-throttle on marketing (eNuW: EUR 18m, +240%
yoy). In turn, this should in turn drive new registrations up to 400k (eNuW;
+334% yoy) at attractive prices (eNuW: CPL of EUR 35, -6% yoy; -16% qoq). As
the retention rate stands at c. 25%, this should add 85k in MAUs, increasing
the revenue base for lottery revenues and cross-selling potential.
In sum, ZEAL should finish off 2024 slightly above its sales guidance (eNuW:
EUR 170m), whereas we expect managment to continue balancing marketing expense
and profitability, leading to an EBITDA within the guidance range (eNuW: EUR
45m). Against this backdrop, we reiterate our BUY recommendation, keep ZEAL
in the NuWays AlphaList and increase our DCF-PT to EUR 60.00 (old: EUR 57.00)
You can download the research here: http://www.more-ir.de/d/31505.pdf
For additional information visit our website:
https://www.nuways-ag.com/research-feed
Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
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2046483 09.12.2024 CET/CEST
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